Variables
Number of Signups 500
Trial $2.95
Regular $39.95
PPS $35.00
% of Referred Signups 85%
Fixed Expenses $20,000.00
Monthly Retention Levels
Trial to Full 40%
Month 2 28%
Month 3 17%
Month 4 10%
Month 5 5%
Month 1 Month 2 Month 3
Initial $45,208.75 $45,208.75 $45,208.75
Recurring $244,893.50 $416,318.95 $520,398.69
Additional Income $31,546.88 $31,546.88 $31,546.88
Advertising Expenses $(455,918.75) $(455,918.75) $(455,918.75)
Processing Expenses $(72,147.04) $(91,003.83) $(102,452.61)
Fixed Expenses $(20,000.00) $(20,000.00) $(20,000.00)
Profit $(226,416.66) $(73,848.01) $18,782.96
Thought you might like to see month's 1 through 3. You'll notice that you've beat the power curve at month three and are into positive cash flow at that point. You're now paying off the loss from the previous 2 months with the next 3. After that, it's painless.
